TOKYO (Reuters) – Global stocks and the dollar slumped on Wednesday after a key advocate for free trade in the White House announced his resignation, fanning fears President Donald Trump would go ahead with tariffs and risk a trade war.

An investor checks stock information on a mobile phone at a brokerage house in Shanghai, China February 9, 2018. REUTERS/Aly Song

White House economic adviser Gary Cohn, seen as a bulwark against protectionist forces within the Trump administration, said on Tuesday he was leaving.

S&P 500 futures dropped more than one percent and set the downbeat tone for Asia.

“If you’re looking for an excuse to sell, this is the kind of announcement that certainly causes short-term downward pressure,” said Rick Meckler, president of investment firm LibertyView Capital Management in New Jersey, regarding Cohn’s resignation.

“He (Cohn) came from Wall street and certainly large institutional investors felt he was very credible in his spot.”

South Korea’s KOSPI bucked the trend and rose 0.3 percent amid a perceived easing of regional tensions, following news on Tuesday that South Korea would hold its first summit with the North in more than a decade.

Cohn’s resignation, however, poured cold water on a recovery in risk appetite in wider markets that followed news of the inter-Korean talks.

In the currency market, the dollar fell as much as 0.6 percent to 105.45 yen, near its 16-month low of 105.24 touched on Friday. The dollar had risen to 106.470 on Tuesday amid speculation that Trump could be coaxed away from imposing tariffs.

Against the Swiss franc, the dollar also shed 0.3 percent to 0.9375 franc, while the euro edged up 0.05 percent to $1.2412.

“The worst outcome for financial markets, in terms of potential to create volatility, would be a confirmation of rising trade friction and benign neglect of the dollar in the short term,” said analysts at ANZ.

The Canadian dollar and the Mexican peso tumbled as Cohn’s departure was seen as raising risks Washington could walk out of NAFTA.

The Canadian dollar fell 0.5 percent to C$1.2936 per dollar while the Mexican peso dropped 0.5 percent to 18.83 to the dollar.